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Thinking Inside the Box

A new era of smart packaging—embedding RFID in boxes—is on the horizon. But first, technical challenges and cost concerns need to be overcome.
By Samuel Greengard
Oct 26, 2006—Ben Miyares has seen the future of packaging and it's smart. The vice president of industry relations for the Packaging Machinery Manufacturers Institute believes that over the next decade, radio frequency identification transponders will be embedded in corrugated boxes, caps of pharmaceutical products, cartons, and plastic containers and trays, ushering in an era of smart packaging. Manufacturers and retailers will be able to use the transponders in packages to track the movement, monitor the condition and ensure the security of their products. "RFID has the potential to change product packaging and the way companies use it within their supply chain and beyond," says Miyares.

This is a vision that both excites and scares many packaging executives. It excites them because creating higher-value smart packaging could enable them to increase their margins on what has long been a low-margin business. It scares them because it's not clear that packaging consumers will be willing to pay extra for corrugated boxes and other packaging with embedded RFID transponders, which means the additional cost of the RFID tags could come out of their already slender margins. Even if packaging consumers are willing to foot the bill for the RFID transponders, packaging companies will need to invest significant sums to figure out how to embed tags in packaging in a cost-effective way.

The next wave: thinking outside the box by embedding inside the box.

"Not only is there a question about who will be willing to pay for embedded RFID, there is an array of technical issues that must be addressed," says Brian O'Banion, vice president of the Fibre Box Association.

Embedding transponders in corrugated boxes is not a new idea. Industry pundits first advanced the idea of embedding RFID transponders in corrugated cardboard and other materials as early as 2003, and it immediately garnered attention. "Many people believed that it was the next great thing," Miyares says. From 2003 to 2005, interest grew. But, since then, packaging companies have lost their enthusiasm because the transponders are expensive, there is no easy way to embed the transponder in the package and there is no clear benefit for the packaging companies.

Still, packaging companies might have no choice but to invest in developing smart packaging. Consumer packaged goods manufacturers subject to retailer mandates are currently printing bar-code labels with an embedded transponder and applying them to cases of goods, either by hand or with a label applicator. Executives at Gillette, Kimberly-Clark (K-C) and other large CPG firms would like to buy corrugated boxes that have already been tagged before they arrive at the company's manufacturing facility. "It's an important next step," says Jamshed Dubash, senior director of technology at Gillette, which is now part of Procter & Gamble.
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